Millions of people are facing a mountain of credit card debt - and there are millions of reasons why.
California (OPENPRESS) March 20, 2012 - Millions of people are facing a mountain of credit card debt - and there are millions of reasons why.
But if you are facing excessive credit card debt, there are some options.
• Bankruptcy is a last resort for most people, and it should be. It will, after all, stay on your credit report for up to 10 years. It's also public record, and could affect you in ways you don't expect.
• You can also turn to a consumer credit counseling service, which is funded in part or in full by creditors. It works like this: Your debt is combined into one monthly payment, and the service disburses the money to all your creditors. The benefit here is that the service can get your interest rate lowered, and stop the phone calls from debt collectors.
• A debt consolidation loan or debt negotiation is also an option, and may be the best solution if you own a home or have some other property you can use as collateral. The downside is that if you can't make your payments, then you lose your home or property.
• You could also simply do nothing. If you are unemployed or have no assets a creditor can obtain in place of payment, then you could stop paying your bills and you'd be judgment proof, meaning you don't pay and your creditors leave you alone. However, this won't last forever. You can bet those creditors will come after their money at some point in the near future.
Another option is debt negotiation. In this scenario, your creditors accept less than the full balance to settle your outstanding debts. But there are some considerations.
First of all, you can only settle your debts on unsecured debt like credit cards, medical bills and retail credit cards. And it's important to remember that regardless of who you owe, they aren't going to settle without a fight. You're going to have to pursue this and, often, for a long period of time.
When considering a debt negotiation, or settlement, make sure you know what would constitute a good deal for you. If you think paying off half of your debt is a good settlement, then go for it. Sometimes, paying as little as 30 percent is the best a creditor will do. Whatever you decide, work with the creditor to make sure you get the best deal for you.
Whatever you choose to do, remember that you didn't accumulate your debt overnight, and it will take some time to pay it off. Along with way, you may see some negative changes in your credit score - but take heart. After your debt is paid off, you can rebuild your credit score, and get everything back on track.
